Citi Agrees to Resolve Potential Future Fannie Buybacks

Citigroup agreed to pay Fannie Mae $968 million to resolve potential future claims for breaches of representations and warranties on 3.7 million loans it sold the GSE dating back to 2001.

“This agreement resolves substantially all potential future repurchase claims” on the covered loans originated between 2000 and 2012, according to Jane Fraser, chief executive of CitiMortgage.

Citigroup will continue servicing the covered loans and the agreement does not release the fourth largest U.S. servicer from servicing liability on those loans.

This “agreement resolves legacy repurchase issues, compensates taxpayers for losses, and allows Fannie Mae and Citi to move forward and strengthen our business relationship,” said Fannie general counsel Bradley Lerman.

“We continue to focus on making strong progress in resolving repurchase requests with other lenders, and remain committed to helping people to buy, refinance or rent a home," Lerman said.

The New York-based bank noted that the cost of the $989 million settlement will come out of existing reserves.

But it expects to add $245 million to its repurchase reserves when it reports second-quarter results on July 15. Citigroup noted in a press release that the $245 million is “generally consistent with its repurchase reserve builds in recent quarters.”